I meet Mark Reynolds (pictured) at The Bedford in Balham, the second site to be launched under Three Cheers Pub Co’s Managed Investments partnership with Ei Group – a collaboration that runs under the Six Cheers Ltd pseudonym. The operations director of the south London group has been camped out at the pub for the past few months, overseeing a mammoth refurbishment of the Grade II-listed building.

The multimillion-pound transformation is pretty impressive – there has been joint investment across its five bars, four private rooms, ballroom, 250-capacity live music club, and 15 individually designed en-suite bedrooms. Although our interview took place on a wet Wednesday afternoon, just two days after the pub reopened, the front bar was too busy to accommodate a quiet conversation. As a result, Reynolds and I settled down to chat in the magnificent ballroom – a grand amphitheatre draped in circus-like awning, filled with legacy and historical flair. With just the two of us sat in there, the grandeur of the space was heightened greatly. A wonderful interview location.

While we could talk all day about the intricacies and work that went into the transformation of The Bedford, my main reason for interviewing Reynolds was to hear about a managed pub partnership from the horse’s mouth. The large pubcos behind these tie-ups are quite proficient in communicating new deals and projects, but, beyond the press release, we rarely hear how the smaller operator views the relationship.

After the Pubs Code regulations were first mooted in 2015, many predicted a sharp rise in the number of managed operations around the country – they weren’t wrong. Ei Group’s Managed Investments arm of the business has grown rapidly since its launch in May 2015. Vixen Pubs – a partnership between Ei and industry operators Helen Standing and Elizabeth Davies – is the 11th Managed Investments project, as the pubco continues to work with industry-leading managed house operators and benefit from their individual retail capabilities. Other partners include Rupert Clevely through Hippo Inns; Karen Jones with Frontier Pubs; and Nick Pring and Malcolm Heap with the Urban Pubs and Bars Two business – industry stalwarts moving with the times and making the most of this modern on-trade opportunity.

Saddle up, partner

So how did it come about for Three Cheers then? Did Ei approach Reynolds and his co-founders Tom Peake and Nick Fox? Or was it the other way around? With two leases already with Ei Group, why was the managed partnership so attractive to the south London trio?

“The Avalon in Clapham and The Latchmere in Battersea are both Ei Group leases, so we’ve always had a good working relationship with these guys,” explains Reynolds. “After reading in the press about them starting to take on managed experts, I decided to get in contact. We had a chat about how we can carry on this relationship – it was when the Pubs Code was coming about and the model was changing. They were looking for good operators and I was looking at ways that we could take advantage of that. They had always been a good partner, so it seemed like a sensible thing to have a chat with them.”

That chat eventually led to the creation of Six Cheers Ltd – a name based on the fact that the partnership is made up of the Three Cheers directors and three more from Ei. Another managed partnership was born. For me, there’s an oxymoronic vibe to such a term. To be ‘managed’ suggests you are reporting to a higher authority, whereas ‘partners’ both have a voice of equal strength. So which is it? To pub goers, The Bedford and The Princess Victoria (the other Six Cheers Ltd site) are indistinguishable in operation from the seven other Three Cheers pubs. The group lists their Managed Investments sites as part of their independent portfolio, which would suggest that there is in fact very little authoritative managing going on from Ei HQ.

“We had a conversation early on that said we want to seamlessly carry on with what we’ve started,” explains Reynolds. “We had seven pubs under Three Cheers, and essentially we’ve now got nine, as our table-top marketing will read. Of course, there are different shareholdings – the only idea was that there are now three directors from Three Cheers and three from Ei, and there you have Six Cheers. There’s nothing more complicated than that – we weren’t trying to come up with a Hippo Inns or a Frontier Pubs model – we have existing pubs and we wanted to carry on what we started. Ei has been very supportive of that. They’re tapping into a business that’s been going since 2002 that knows south London very well. We’re the perfect fit for a managed expert in this part of town.

“They haven’t held us back either,” he continues. “The Bedford is a multimillion-pound refurbishment and it has been great having them on board for that because they have people who are watching the numbers for us; project managers who have done big builds. Ei helped us keep a reign on the spending and made us dot the i’s and cross the t’s. When a building is 22,000 sq ft, if you don’t do that you could end up spending more than you’d like to.”

What’s in it for Three Cheers?

I’m sure that Reynolds and his colleagues didn’t partner with Ei Group solely for its project management skillset. While the Three Cheers trio are evidently devoted to the pub sector, they’re still running a business and they still enjoy making money. As Reynolds tells me, they’re not going to do this for free. Although he won’t disclose the specific numbers behind the Managed Investments arrangement, he confidently states that “the arrangement works for both parties”. Both Ei and Three Cheers have a percentage in the business, with Three Cheers also being paid a fee for managing the sites in question.

“As long as we’re comfortable with the management fee, after that, things are split,” says Reynolds. “They have 11 managed experts now, and I believe they have a similar deal going on with all of those experts.”

Sceptics of such managed arrangements may argue that it’s all about the big boys profiting from the smaller groups, but, according to Reynolds, it works both ways. Yes, Three Cheers is paid a fee for its managed efforts, but the opportunities go beyond finances and into operations.

“They have got a huge back office, which can be very helpful,” he says. “They see business slightly differently, so they can help a small business in lots of different ways, whether that’s through purchasing power, legal teams or anything else. There are things that they bring to the party.”

Scale is certainly something that a business such as Ei Group is comfortable with. As one of the largest pub companies in the country, dealing with a hefty estate of varied venues and concepts comes as second nature. Does that mean it has a greater level of expansion expectation? If you sign up to a Managed Investments partnership, are you automatically expected to role out 15 sites quicker than you can say ‘Five Guys Burgers & Fries’?

“There is a pipeline that has been talked about, but nothing has been set in stone,” says Reynolds. “We’ve just opened The Bedford, and the focus is on this at the moment. We have to get this right first before we start taking on lots more. There’s no pressure from them at all, actually. They have their own managed model that is working quite well and is different from what we do, so there will be pubs that they can take on with that. They don’t want us to take on anything that we’re not comfortable with. If we wouldn’t take a site on as Three Cheers, we wouldn’t take it on as Six Cheers.”

At the end of our conversation, I mention the London-based PubLove group to Reynolds, which in 2017 converted all of its current Ei Group leases into a Managed Investments arrangement. With Three Cheers already operating two pubs through Ei leaseholds before its own Management Investments set-up was agreed, was it not tempting for the trio to include those sites as part of the Six Cheers deal? If those who predicted a post-Pubs Code rise of managed operations are to be believed, there are plenty more managed agreements to be made this year. He talks earnestly about the industry’s obligation to adapt, including Six Cheers as an example of on-trade evolution, which would suggest that for this south London business, this managed model is a foundation for the future.

“We’ve got years left on the leases,” Reynolds concludes. “But in the future, it probably will happen. When leases come to an end, things will evolve.”